good evening. i'm wolf blitzer in washington with alli velshi in new york. we're following breaking news. a democratic source tells jessica yellin at the white house there is apparently a fiscal cliff deal that is in the works right now. we're also told that the vice president, joe biden, is heading to capitol hill. ali, this could be a dramatic moment that we're watching right now. >> we were told joe biden would only go over when it looked like there was a deal. not only to shore up support for the deal in general with the republicans with whom he has a good relationship, but with democrats, we have heard all day today there have been some democrats dissatisfied by how far they have had to go to get that deal. if you want to read tea leaves, it looks better than it looked a couple hours ago. >> it looks like biden is going to be at this meeting with the

democratic caucus. the democratic senators, that's supposed to start in 15 minute. he'll brief them on what's going on. he has some problems, though, with some of the more liberal democrats who apparently aren't very happy with all of the details. let's go up to the white house. jessica yellin, our chief white house correspondent, is standing by. jessica, brief us on what we know right now. >> what we know is that vice president biden is now headed up to capitol hill to begin selling this compromise to the members of the u.s. senate, the democratic members of the u.s. senate who will have to vote on this and get it over the finish line. some of those members, as dana has been reporting, are going to be unhappy with elements of this deal, and will have many questions for him that he's going to have to explain to them. he's been a 35-year veteran of the senate, so he knows how to talk them off the cliff, quite literally, in this case, and get them onboard to get this over the finish line. he did it during the debt talks.

he helped negotiate this deal with senate minority leader mitch mcconnell, but senato harry reid was very involved in all this, and the hold up for the last six some hours this evening, the republican leader, senate minority leader, mitch mcconnell, and the white house had fundamentally come to an agreement on principle, and there was this stall in the talks for the last hours tonight. it was because democratic leader harry reid was refusing to give in on some points that were very important to the democrats. and so he's won some concessions, and that should help make the vice president's sell even easier tonight. you know, there are some people saying, look, don't say we have a deal until you know, everyone signs on inside that room. now, what we know is that there is a deal in principle between reid, mcconnell, and the white house. that is the major hurdle they had to overcome, and it's now

all but the selling, and of course, the voting, wolf. >> they have to draft it and put it in a form of legislation. dana bash is our senior congressional correspondent. is there anything else, jessica, you wanted to add before we bring in dana? >> i would say they say it's already in legislative language. because so much of this has been prewritten during various other negotiations, they don't have to take time to actually do the drafting. it's already written, is what i have been told. >> if that's the case, dana, it looks like there could be a vote before midnight tonight. >> yeah, i have a couple updates for you. first of all, the first update is joe biden, the vice president, has arrived here at the capital. i'm going to turn around because this is the room back here, you see the people milling around. that's where we expect him to eventually walk in when he goes into the caucus room with the senate democrats. as you mentioned earlier, the vice president is also the president of the senate so he has a pretty nice office here in the capitol building.

and he's expected to go to his own office before he meets with senate democrats. we're going to watch for him behind me. if you see him, let me know, and we'll stop and watch him. but with regards to news that we have gotten in the past couple minutes, i talked to a senior democratic source in the senate who said there should, should be a vote tonight still. i was sort of hedging a little bit, looking at my watch saying how is this going to happen, but this source says there should still be a vote tonight. we're watching and seeing how that will happen, but jessica said, and i was told earlier today in the hall by republican as well as democratic aides that the legislation has already been kind of in the works, has been processed, and it really is kind of a cut and paste job on a lot of these big issues because they have extended a lot of these issues with regard to tax extenders and others many times before. they're working on it seriously, clearly to try to get it done. but with regard to the whole

question of if we're calling it a deal or not, jessica's dead on that the principles clearly believe they have a deal. frankly, when you're talking about biden and mcconnell, they thought they had a deal hours ago, maybe even last night. but there has been a hold up because senate democrats have been pushing back on a lot of things they want to make sure they fight for for their democratic membership. that's the main reason, according to democratic sources i talked to here in the capitol, everybody is being coshiautious to call it a deal because they want to be respectful of the process and not anger rank and file democrats even more than they are frustrated with their leadership. that's why they're waiting to call it that until joe biden himself, former member of the democratic caucus, was a senator here for 30 years. he knows the system, he knows the vibe, he knows the atmosphere. he knows how to talk to his former colleagues. until that happened. and we expect that to happen in about five minutes. >> jessica yellin still at the

white house. are you getting more information, jessica? >> a democratic source tells me that senate majority leader harry reid and house minority leader nancy pelosi, both democrats, have signed off on this deal in separate calls with president obama. so president obama has been on the phone here at the white house with the democratic leaders over in capitol hill, and discussed this deal with them, and both of the top democrats in congress have agreed to the terms of this deal so it looked like they have an agreement to proceed and we have something that congress, boat houses of congress can move forward with if biden doesn't get too much resistance tonight and speaker boehner agrees to put it on the floor in the coming days. >> let's bring in a democratic senator, jeff merkley of oregon is joining us. you're getting ready to go into this democratic caucus meeting with the vice president, joe

biden. what are you hearing right now? are you on board? >> we haven't heard the detail said, but there's three main things we want to nail down. first is fairness to people who versus those who are best off in society. the second is are we looking down the road to another fiscal cliff, such as sequestering or the dent ceiling kicking in a few month from now, and the third piece is is it financially responsible. are we producing a deal that will actually put us on a path to a financially stable future. those three things are the big questions that have been raised today that we have been raising, a number of us, with our elected leaders. they have been working to try to find a path that will address those. >> on those points, we seem to know, basically, what the deal is on the fairness question, what you're talking about, $450,000, that's the threshold. if you're making $450,000 or less and filing as a couple, you're not going to see any tax

increases. is that good enough, is that fair for you? >> well, we're going to see a 2% raise for those at the bottom and a fraction of a percent for those at the top. that's quite a differential. there's been some discussions around that. we'll hear what our leader has to say in a few minutes. >> if it's $450,000, everybody below that is not going to get a tax increase, will you vote for it. >> >> tthe people below will ge tax increase. >> that was always just a one year stimulus. that was not a permanent arrangement. >> it's one of the changes that was looked at. it was one year ago, we renewed it for a year. again, it's an overall perception of if it's fair to working people. a lot of the details have gone up and down today. we'll find out the bottom line here in a few minutes. >> that payroll tax cut, that's going to go for what, 4%, 6% -- 4% up to 6%. the president wasn't even pushing to extend it. so did you have any reason to believe it will be extended?

>> no, no. not at all, but i'm just pointing out this is the lens through which we're looking at this in fairness. we already know that one piece was set aside for working people. that's the 2%. but we're looking now at folks, for example, who are earning $300,000, $350,000, $400,000 a year. they're going to get the full same bonus benefits they're getting now. the caucus hasn't had a discussion over the details. we'll have that in a few moments. >> excuse me for a second. it sounds like you're skeptical on the second point you raise as far as raising the debt ceiling, it looks like they're kicking that down the road as well. it's not going to be part of this current deal. >> well, my understanding is that earlier today, that it was going to be basically not changed. we would be looking at it in three months, in march. if that is not changed, we may be looking at laying out a series of crises for the u.s., which is the opposite of what we need. and sequestering is only delayed

for two months, then what we're saying is right after we give the same bonus benefits to those earning $350,000, we're going to come back and balance the budget on the backs of programs that serve working people. so that's a key question, how is sequestering going to be dealt with? that's a big piece of what harry reid was working on this afternoon. >> i assume you'll raise these concerns when the vice president briefs all of you in the next few minutes. from what i'm hearing, senator, you think that based on what you know right now, based on what all of us know right now, the country would be better off just going over the fiscafiscal clif letting the sequestration go through, letting the tax increases go through instead of allowing this temporary deal. >> we would be better off with a good deal. we would be worse off with a bad deal, and we're going to find out the details of that in a few minutes. >> john avlon is with us as well. i know you want to ask the senator a question. go ahead. >> senator, what you're saying

there is that a bad deal is worse than no deal, correct? you're saying basically if you believe it's a bad deal philosophically, we should go over the cliff, correct sdm. >> we have a series of proposals, one is the cliff. the question is can we do something better than that? that's what we're looking to find out about. but if we're in a situation where we essentially take this moment in which the president, he vowed, i will not sign a bill in which we don't raise the rates on those over $250,000 because we need the revenue to put us on a fiscally responsible path, if that is not being done, yet we're going to have another crisis three months from now, that should be of concern to all. again, i'm not judging the package right now. i want to hear what the majority leader reid has to say and what the vice president has to say. i think they're starting to talk right now. >> bottom line, what i'm hearing you say, senator, that even if harry reid sports it, even if joe biden supports it, even if

nancy pelosi supports it, even if the president of the united states, who was just re-elected supports it, you're not going to necessarily vote in favor of it. >> i'm going to make my judgment after i hear the details. >> you'll hear the details. we'll all get the details fairly soon. senator, good luck. >> thank you. >> happy new year to you. john, let me bring you in for a quick recap right now. it looks like there's a deal in the senate that's going to work out, maybe senator merkley won't support it, maybe a few other liberal democrats won't support it, probably a few conservative republicans won't support it. but if you have harry reid onboard, mitch mcconnell on board, it's going to get a vote in the senate. >> any deal to pass both houses needs bipartisan support. neither side, as the president said repeatedly, is going to get everything they want. one way you can tell the deal does meet that criteria is the press releases are flying from

the liberal groups and the conservative groups like the heritage foundation, both saying from their opswlt philosophical perspective, don't sign this deal. this is a bad deal. so the activist groups on either side are unhappy, but it seems like there's a basis for bipartisan agreement, at least as a patch on the fiscal cliff. it does not look like it will do with the debt ceiling. it does look like it starts to address the tax piece at least. >> let's go back to dana bash on the hill. what are you learning? >> we're clearly doing play by play as this is a fast moving story. we reported that joe biden, the environment, is in the building. our photographer just saw him go into harry reid's office. he's currently meeting, i don't know, one-on-one, or maybe with other members of the senate democratic leadership in the office of senator harry reid, which is just around the corner from where i'm standing right now.

you see this crowd of people behind me. those are reporters waiting to see if the vice president is going to come through because he's eventually going to come through he and meet with all of the senate democrats for the meeting you were talking about with the senator. sounds as though they're doing a little talking about -- a little bit of a game plan about how they're going to present this to the caucus, and obviously, that's a very delicate issue for reasons we have been talking about. the democratic caucus, many of them are not happy. in fact, i have to tell you i was told by one democratic senator when they put up on a screen, they put up yesterday in a meeting that democrats were having, they put up almost like a power point, i believe, some of the aspects of the potential deal. when they put up the idea of $450,000 raising the threshold to that, that a lot of democrats complained. so we're going to see what happens when they say that is the final deal. >> complaints on both sides.

let's go back to jessica yellin at the white house. more information coming in there as well, jessica. >> hi, wolf. that's right. i'm getting now some new details on what is in this deal. and according to a source familiar with the deal, it has been signed off on, again, by nancy pelosi, harry reid, and the president, and senator mitch mcconnell. it includes a two-month delay in the sequester. those are the automatic spending cuts that would kick in at midnight tonight. and it would be -- that two-month delay would be paid for by a combination of both the taxes that will come in when the increase kicks in for the top earners and it would also be paid for with spending cuts. and the spending cuts are going to be divided between defense cuts and nondefense cuts. that means issues that are important to democrats will take a bite, and issues that are important to republicans will be

getting a bite taken out of them. the estate tax issue that's being debated, they sort of gave republicans what they wanted on this, and maybe ali can explain it in a minute. but the cap that is index to inflation, that is going to stay index to inflation. i was told this is not a huge amount of money. ali can discuss with you whether or not that is true. the final point is whether medicare providers, who people who take medicare as doctors, whether -- how that patch is going to be paid for. it will not be paid for through a cut to obama care. that was something republicans asked for. that was not agreed to. but the big headline out of all this is they did agree to push that sequester off for two months and they agreed to find a way to pay for it, half in revenue, and half in spending cuts. wolf. >> so the details are beginning

to come in. it looks like they have a deal. it looks like the senate is going to vote. the vice president is about to brief the democratic members of the senate. let's go back to capitol hill. dana bash is up there. dana, just to set the scene. you're standing outside the room where the democratic senators are going to be meeting with the vice president. >> that's right. you can show just to give you a context, and then i want to piggyback on what jessica is saying. you know what? actually, kim, can you flip around? we're going to get the vice president right now. we're going to get the vice president right now. mr. vice president, do you have a deal? mr. environment, we're live on cnn, do you have a deal? senator reid, how do you feel? got to love live tv. there you go. >> he kept saying happy new year. and he had a smile on his face, so i assume he thinks he's going

to have a happy new year. i'm sure that he did not necessarily think he would be spending new year's eve with you, dana. >> no, i'm sure he didn't. and i can tell you that a lot of us up here are -- you know, we like each other, but spending new year's this way is not exactly our way of a fun way to ring in the new year. certainly, that was interesting. the vice president is a happy guy. he always smiles, particularly when he's with the cameras and he knows this is an important time. the fact that he and harry reid and there were other members of the democratic leadership walk by this camera from where harry reid's office is, which is right behind our camera, the fact they decided to walk by the cameras clearly, to me, was a show of unity. they didn't have to do that. there are other ways to get back there where they would not be seen on any cameras, never mind live on cnn. they knew we were live and other networks were live. the fact they did that was not an accident. clearly was intentional. and that goes to the point that i wanted to make after what

jessica was saying about the final way that they made this deal with regard to the sequester, the mandatory spending cuts that kick in january 2nd, the fact they delayed it for two months. all day long, wolf, all day long, we have seen the battle between senate democrats and the vice president. their fellow democrat, trying to push back against him for cutting what effectively is this deal to make it a two-month delay. senate democrats wanted to delay the sequester for a year-plus. at the end of the day, the vice president kind of won out, and clearly, democrats feel they won in other areas. and then at the end of the day, they had to come together on how you pay for that, what you put in place. as jessica said, they agreed to split it with revenue from taxes and new spending cuts. when you're talking about the money, the big money here at stake, this is $24 billion, as a republican source said to me. that's like change in the cushions, in the couches here on

capitol hill. that's not very much. but at that point, it was a matter of principle. that's where things stand right now. the fact is that the vice president is now meeting with senate democrats and we should know in short order what the result is. and more importantly, when the vote is going to be. >> it's going to be interesting next couple hours. we'll see what happens. ali velshi, give us your take on what's going on. we're watching this being made, if you will. >> it's a principled win for a lot of parties as opposed to a mathematical win. we're going to take care of the dock fix, the cut that doctors who take medicare will take. that's a serious one because while we have been characterizing that as doctors taking a smaller paycheck, in that case, it wouldn't be the case. it would be doctors removing themselves from medicare which would create a shortage of doctors. we're also looking at the estate tax. this is what jessica brought up. having a $5 million exemption. your first $5 million is exemp

from taxation if you give that to your descendants. that's a big number. that's pretty good. that's a win for the democrats. but $5 million exempt is a bigger win, i think, for republicans. that will be index to inflation. nat number, that $5 million will go up by the rate of inflation every year. the sequester, the two months paid for buy-down, that's complicated. that just means this conversation is going to go on. the sequester hasn't been dealt with. the debt limit hasn't been dealt with. what i haven't seen yet and maybe jessica or dana know about this, is whether we have a deal on the extension of the unemployment benefits. the federal unemployment benefits. without the federal emergency benefits, people who are unemployed get 26 weeks of unemployment, the fed took that up to 79. that all expired. if you were on federal unemployment, that was gone as of saturday. i want to find out what is going on with that. it's a little bit for everybody. the bottom line, wolf, as you

know, this has been the difficulty. this is what a compromise has to look like. it's going to hurt everybody. everybody has to think they left something on the table. clearly, everybody thinks they do. the strangest part is we haven't heard what john boehner thinks about it, whether he thinks he can muster a majority. we're hearing from dana and jessica and you heard from the senator there are some problems on the democratic side of the senate on this, and the weirdest thing in the world, grover norquist, signed off on something that raises taxes on people who earn $400,000 as individuals or $450,000 as a household. you know, cats are sleeping with pigs today. it's very unusual, but it looks like everybody gets to say they got something out of this deal, but it's far from a complete deal. this is a puny, mini deal that $24 billion that dana was just talking about, it is a small portion of it, but it gives me hope in humanity that they were able to get a deal done.

i don't want to jinx this thing. it's still only 9:20 on the east coast. >> everything i have been hearing from white house sources as far as the president was concerned, extending the unemployment benefits for 2 million americans, as far as he was concerned, that had to be in the deal. he wasn't going to accept anything short of that. >> i'm thinking that was in there. i'm thinking that's got to be in there. >> we'll soon find out. stand by, everyone stand by. we're going to recap what is going on. once again, a democratic source tells cnn senate majority lea er harry reid, the house majority leader, nancy pelosi, they have all spoken to the president, signed off on a deal. we're told republican leader mitch mcconnell is on board. the vice president is briefing democrats right now. you saw him walk past the cameras wishing everyone a happy new year. we'll see if there's a happy new year. much me of the breaking news right after this. you know that little 50-pound thingy

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following breaking news. right at the bottom of the hour, a lot happening on capitol hill right now. word of a possible deal to avoid that fiscal cliff. the vice president of the united states, joe biden, he is now inside a room, closed door room, meeting with senate democrats. he's trying to sell the plan. it was just a few moment ago we saw him walk by our own dana bash up on capitol hill, with a lot of other reporters going into the room with the senate majority leader harry reid. watch the tape.

>> can you flip around. can you flip around? we're going to get the vice president right now. we're going to get the vice president right now. mr. vice president, do you have a deal? >> happy new year. >> mr. vice president, we're live on cnn. do you have a deal? >> happy new year. >> senator reid, how do you feel? got to love live tv. there you go. >> we do love live tv. dana bash doing an excellent job on capitol hill. the vice president smiling broadly, just saying happy new year. here's what we know so far. the house minority leader nancy pelosi, the senate majority leader, harry reid, they have spoken to the president, they have signed off on the deal that includes a two-month bye-down, as they call it, on the automatic spending cuts that were supposed to go into effect on january 2nd. that means a paid for delay in the automatic spending cuts will be paid for with a mix of

revenue and spending cuts. that's technical jargon. it will cost approximately $24 billion. half will be paid for in new tax revenue, more tax revenue coming in. half in spending cuts. of the spending cuts, half defense, half nondefense. the estate tax will remain tax free, the first $5 million of anyone's estate will be tax free in terms of the exceptions for the individual, the cap is expected to be index to inflation, so it will increase that $5 million every year according to inflation. finally, that so called doc fix, for doctors who accept medicare patients, that will go into effect. it will continue, it will not be paid for by the affordable care act. lots to dissect as we await final word from the democrats and the republicans. i want to go back to dana bash. dana, we know reid is on board, nancy pelosi is on board.

mitch mcconnell, has he definitely signed off to this deal? >> yes. he actually was an early signer of the deal. because he, of course, was the point person on the republican side. i should say, i said yes pretty definitively. behind me, you see a gaggle of reporters, and he's probably going to be mad at me for doing this, but that's mitch mcconnell's spokes person talking to people about what's going on. hopefully i won't be proven wrong, but it's hard to believe i will. mitch mcconnell wient to the floor hours and hours ago saying as far as he was concerned, he and the president had a deal except forsequester, which we now know is resolved. it's hard to imagine he's not on board. the question is how many republicans are going to vote for this? that really does matter not so much in whether it's going to pass the senate, but more importantly, its fate in the house. we talked a lot about from early

on when the talks were with the house speaker and the president. that a big hurdle always is the house, particularly because you have house republicans who are very reluctant to vote for anything that looks and feels and smells like a tax increase. so if there is significant republican support for this, it will certainly be a good omen for this getting through the house because you'll probably see republicans in the house use that as cover to say we can vote for it too. as ali oztalking about and others, certainly is a lot of pressure. i'm getting e-mails from some of the most conservative and pretty powerful groups who try to hold members' feet to the fire on tax issues saying reconsider this vote, and increase in taxes. and we'll penalize you, and a lot of these groups have money and they do try to run and fund candidates who run in primary against house republicans. i have to tell you, i talked to so many house republican sources who told me that is a very real fear among so many house

republicans. and that is one of the things that has been keeping this thing so paralyzed and has brought us to the brink where we are just hours before the deadline. >> doug, grover norquist, the architect of the no new taxes pledge, as you know, he was on air moments ago, he told ali, he told me earlier in the day, he would vote for this. he does not see that as a break, a violation of the no new tax cut pledge. >> he does not and he was the first and most famous, if you will, person to have democrats and republicans members of congress, mostly republicans sign this now new tax club, but there are other groups that also are pretty powerful and they spend money on elections. and they do not agree, at least, heritage action for sure has sent out an e-mail tonight saying don't vote for this. as we talked about throughout the day, it is a different

dynamic if the house votes, as we expect them to on january 1st or 2nd, than it is today. it is politically. i'm sure there are a lot of people out there scratching their heads saying we can see right through this, and they probably can, but it's easier for republicans, probably a handful of them, to vote for a bill that effectively cuts taxes, which will happen after this clock strikes midnight and all taxes go up, than it would be to vote now to raise taxes. it really matters when you're talking about potential competitors running ads against you. it will be harder for them to do, at least some of the members think, if they have that different phrase or different way to look at this. >> let's go to the white house. jessica yellin is standing by. some of the conservative groups don't like it, they hate it. they're urging republicans to vote against it. some of the liberal groups aren't very happy with the president. they think he capitulated too quickly on some of these sensitive issues. >> that's right. wolf.

a number of them are urging democrats not to support this and saying they have much more leverage come midnight. among those groups, the aflcio, the labor union, is not quite trying to spike the deal, but was quite critical as it was developing earlier in the day. we have to see how they feel about it as it has emerged now. there have been some changes in these last few hours. ali asked earlier about whether unemployment insurance is included. yes, it is included, a one-year extension, not paid for, but it never really is paid for because it's an emergency provision. one thing i would point out is this entire -- this entire package sets up another fight in the new year over the debt ceiling. we'll see that, you know, the sequester is put off, the spending cuts are put off for two months. that's exactly when the debt ceiling, these extraordinary measures secretary gietner put

into effect, expire. we hit our debt limit and we'll have that fight yet again. that's going to be a titanic battle you can imagine now with republicans and democrats bringing up the same issues yet again. vice president biden, you can only go to that well so many times to negotiate with mitch mcconnell. he is exceptionally skilled at it, but you wonder how many times they can have this kind of last-minute negotiation. president obama has said, they have said here at the white house, at least, you know, he's not going to have that kind of fight again, which suggests he's willing to go over the debt limit and let the country default next time. >> he says that he's not playing that game anymore. let me bring ali into the conversation. the president said i'm not going down that road. we're not going to let the debt ceiling be a major political fight. the country can't stand it. the last time we went through that fight, our credit rating was diminished as all of our viewers recall. not only here but around the

world. he says he's not going to do it. at some point, they have to raise the dbt ceiling, otherwise, there will be a technical default. >> a technical default. there's nobody in the world other than rand paul, who thinks we're not going to be able to pay our bills. the united states always has the ability to pay its bills. whether you agree with it or not, we have printing presses. the money may be worth less over time, but the fact is we can keep printing money. there's no danger that the bills can't be paid. there's a danger that legally the bills won't be paid because we hit this debt ceiling. it is an arcane system. we need to change that. we need to tie the idea that you pass legislation to money. that's how it works in every parliamentary system in the world. virtually nobody has a system like the united states' debt limit system. it doesn't make a lot of sense. i want to bring john avlon into the conversation. i have spoken to grover norquist and wolf has spoken to grover

norquist more than we have spoken to our families in the last few days. he's making an interesting philosophical point. if we let these guys go ahead with some kind of tax increase on people above $450,000, we can then move the discussion to spending. so far, the spending is a much more complicated part of the deal. it's a much harder deal to make than to arrive at what percentage to charge and at what threshold. the republicans are hoping that this debate that goes on for two months and longer is now going to go to spending. is that a good bet? >> mark that on your fiscal calendar. when jessica said to us the deal with the sequester, which has been the big open question. remember house republicans' questioning of this. when that gets moved to february, we're doing this all over again. maybe there's a chance to get our deficit and debt in line. the downside, we're going to be playing with fire again walking right up by the edge of the

cliff. >> the tax rate and how much you tax, that was actually never really a grand bargain kind of discussion. that was oh, guys, you say 3, we say 4, whatever. the real challenge is all of the low hanging fruit for cutting spending is gone. you know, mitt romney talked about big bird and pbs during the debate and people laughed. it wasn't that laughable. it's one of the bigger things left you can cut. you can cut amtrak. there aren't a lot of things that are billions of dollars in the budget you can cut. you need to cut things that hurt, that people care about. >> the deal with the sequester cuts was half out of defense, half out of discretionary spending. that's where entitlement reform stands. there are ways to cut what the president calls accurately bending the long term cost curve. you're not cutting costs in a way that can reduce economic growth immediately, but you reduce the long term debt obligation for the country, which is what we need to do.

both parties agree with that, but the debt ceiling creates a situation where we really will have to start dealing with it. if we deal with it constructively, that's great for the economy. if we deal with it destructively like we have every other time we played this game, the country could be in trouble. >> i think you're right, i don't think you're even going to find the most liberal economist in this country saying we don't have to deal with deficits and debt over the long term. the question is in a recovering economy, where about a 3% economy right now, we're probably the fastest growing big economy in the world. we're not counting india and china. they fall into a different category. whether or not cost cutting in the short order is dangerous or good for the economy. and that's the question. i don't think we disagree, wolf, that's it's got to be done. the issue is on the timing on when the cost curve has to change. >> lots of stuff happening right now. ali, stand by. everyone stand by. i want to show our viewers the picture of the scene outside the

room where the vice president is briefing the senators. we suspect after that meeting senators will start coming to the microphones and tell us what happened inside. maybe the vice president will come to the microphone, maybe harry reid. this is the place to be. we'll get you the latest information. we're just a little more than two hours away from midnight. 2:20 to be precise. the fiscal clock is ticking. stand by, much more breaking news right after this. i need you. i feel so alone. but you're not alone. i knew you'd come. like i could stay away. you know i can't do this without you. you'll never have to. you're always there for me. shh! i'll get you a rental car. i could also use an umbrella. fall in love with progressive's claims service.

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we're following breaking news on the fiscal cliff. looks like there's a deal. the vice president is briefing democratic senators right now. i want to go to that room where they're meeting. dana bash is outside the room where they're meeting right now. a little more than two hours before midnight. here is my sense. >> they should get a roll call tonight because if they let everyone go home and party and do a little new year's eve celebration, they come back tomorrow, who knows what they're going to do if they sleep on it. they better do it tonight if

they're going to do it. tell me what you're hearing. >> that is definitely the feeling here, that they have momentum and they have people here on new year's eve. they want to capture that momeantm. they want to strike when the fire is hot. you know, name your cliche, that certainly seems the way things are headed. the question is how quickly can they come from the meeting going on behind here with joe biden, the vice president, and his fellow democrats in the senate, and how quickly can they go from that to a vote on the senate floor? sources that we're talking to here in the hallways think it can happen rather quickly, more quickly than you would thin. one thing i wanted to talk to you about because this is an issue, the fiscal cliff, it sounts esoteric, and it is, but it has an affect on every american. one people should note is not in the deal because it was never on the table, is a payroll tax, what is effectively a payroll tax hike. it's actually a payroll tax holiday expiring.

everybody agreed they were not even going to touch that. they were going to allow that to expire. what that means in real terms for americans when they're looking at their paychecks is they're going to see a 2% bite out of their paychecks starting on january 1st. for a worker making $50,000 a year, 2% is $1,000 more in taxes a year. if you make $20,000 a year, it's about $100 more. so for most americans, that's going to be pretty sig knlt. it will affect all americanamer. all americans will see the difference in their paychecks because this is an issue they didn't even start to think about bringing up. part of the reason is because there still is a sliver of hope of really reforming the tax code in the new year, in the new congress. based on how hard this was to get done, it's going to be interesting to watch that process, but there is a sliver of hope that that might actually be addressed in a real and productive way. >> extending that payroll tax

cut for another year, let's say, it was a temporary one-year deal designed to stimulate the economy, create jobs, put more money in people's bank accounts, let them spend more money. it was not a pressing issue to further extend it from democrats or republicans, was it? >> it wasn't. they all really never pressed for it. neither democrats nor republicans. it's kind of interesting that just politically and even in process, which process is politics here on capitol hill, that when we had the big fight over extending it just for the past year, it really served as a model in part for how they're getting this fiscal cliff deal done if it does in fact get done. and what i mean by that is this -- it was done in the senate, and then it just went over to the house where house republicans were not interested in voting on it, a one-year extension of this at all, but they were sort of forced to do it because of the way the senate

acted. it's not unlike what we'll probably see if the senate votes tonight and the house votes tomorrow. republicans in the senate and house are not going to be happy about it, but it's going to be, as they say here, they're going to get stuck with this bill and they're not going to have any other choice but to bring it up and probably pass it. >> can we assume, dana, that the senators, maybe even the vice president, will emerge from the meeting that is under way right now and come to the microphones that are near you? >> i would love to say yes, but we're getting some signals from democratic leadership sources that harry reid will probably not come and talk to us. however, i have seen this movie before. we're told that he isn't going to talk and he is and vice versa. i think a lot of it dependents on what happens in the meeting which has been going on for more than a half hour. perhaps they will come out and announce what they're going to do, or they might go to the senate floor. we're not allowed to show it specifically because we don't want to break the rules of the forum of the senate, but it's

right over here so they could go to the senate flor and announce what they're going to do. >> where is mitch mcconnell right now? >> he appears to be in his office. if you want to get a sense of the geography of where i am, this is the second floor of the capitol, second floor where the senate is. it's that way. so mitch mcconnell's office is really just across the hall, funny enough, from where senate democrats are having their meeting right now. >> stand by because we're going to go there as soon as that meeting wraps up. we'll see what they say as they come to the microphones. this isn't the only story we're following. anderson cooper is standing by with kathy griffin. you have a big story you're working on as well coming up at the top of the hour. how excited, anderson, are you. i see kathy griffin, she's pretty excited. you're both looking pretty happy. >> yeah. we're very excited, wolf. times square, new year's eve, more than eeanticipated. more than a million here. kathy griffin, we haven't put a

microphone on her yet, so she can't interrupt. she's very concerned with the fiscal cliff. not many folks following that story. they're here to have a lot of fun and we're going to be bringing in the new year with them starting at 10:00 all the way to 12:30. >> is she signing right now what you're saying? is that what she's doing, anderson? >> no, she's doing all sorts of gestures. she can't hear anything you're saying. believe me, count yourself lucky. count yourself lucky. >> uh-oh. >> a long night. >> anderson, kathy, we'll be watching. >> help me, wolf. >> we're wrapping up the fiscal cliff right now. we're looking forward to anderson and kathy. they're coming up at the top of the hour. stand by for that.

looks like a deal.

we're follow the breaks news. we'll see if the senate actually does have a roll call vote on the floor of the senate within the next two hours. jessica yellin is over at the white house watching what's going on. you put it in good perspective earlier, dana bash is up on the hill. if there's a deal, jessica, if the senate does vote tonight, are you hearing anything that we might also hear at some point tonight from the president of the united states? >> i think that it is new year's eve and president obama wouldn't want to do anything that would say or do anything to derail this process in any way. i do not expect to hear from the president tonight. i would not be surprised if we hear from him, wolf, tomorrow at some point. and i do think that we know he's been on the phone with both harry reid and nancy pelosi so he has been hard at work and i also know he has been engaged in this process behind the scenes. while vice president biden has been talking directly to senator mcconnell, the president has been engaged in directing

exactly had he wants to see in this dae as well. look for him to speak tomorrow. we can all enjoy our new year tonight. >> we'll see how much enjoyment we have. what time did you start working this morning, dana? i've been watching you on television all day. >> reporter: i don't know. the days are all running into each other, wolf. it's been a long day, a long year. it looks like it is coming to a close and most importantly it does look like we are going to see a vote sometime before the ball drops in times square. i was just talking to a democratic source, don't take this to the bank, it is the united states senate and it is still clearly in flux but i was talking to a democratic source who said that the hope going into this meeting that the vice president is having with senate democrats was to have a vote around 11:00, 11:30 eastern. we'll know a lot more when they come out. the desire, as you said earlier so well and is so true is really

to capture the momentum, to harness it. everybody is here. everybody is frankly tired and ready to finish this. but to be fair, there are people who want to be responsible and read and know exactly what's in this bill that they're voting on so there are going to be pushes and pulls and tugs with all of those different dynamics going on here. >> i assume it will be an up-and-down vote, won't be a filibuster or anything along those line, 51, that will do it, right. >> probably. i don't want to get too far into senate procedure. what generally happens, in order to even get this on the floor, all senators have to agree or at least no senator can object to doing that. once it gets on the floor, i'm pretty confident that 51 or 60 won't be that relevant. it will probably be more than 60, but we'll see what kind of agreement they come to. >> ali velshi has been with us

since the crack of dawn. what time did you start? >> i started at 4. i'll start again tomorrow at 4 in the morning. if we get a deal by midnight, i'm going to kiss you. >> we'll be celebrating together. >> we know nancy pelosi signed on, we know john boehner had trouble getting agreements. i hope we have a deal. >> we'll have another long day tomorrow. we'll see what happens. ali thanks very much. thanks to everybody. new year's eve with and anderso cooper and kathy griffin right here on cnn. that begins next.

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